AHK AIR HONG KONG LTD. v. THOMAS GILLIGAM

1988, No. A7 & No. A1040

IN THE SUPPEME COURT OF HONG KONG

HIGH COURT

1988 No. A7

BETWEEN

(Consolidated by the Order of Master Hill on the 3nd day of March 1988)

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J U D G M E N T

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1. These proceedings saw the light of day in the Labour Tribunal where on 2nd December, 1987 the plairtiff, Thomas Gilligan, sued his employers, the AHK Air Hong Kong Limited (hereinafter called the AHK) in T.S.T. 9/87 for breach of contract, arrears of wages, rent and management fees.

2. A month later, before the plaintiff's claim could be heard by the Labour Trilunal, AHK proceeded against the plaintiff in the High Court in Action  No. 7/788, seeking certain reliefs including a declaration, an injunction and enquiry into damages.

3. On 28th January 1988 the Labour Tribunal transferred the plaintiff's claim (T.S,T S/E7) to this Court, and it became H.C.A. 1040/88.

4. On 3rd March, 1988, a Master ordered that both actions No.7/88 and No. 1040/88 - be consolidated.

5. The plaintiff alleges that under a contract of employment dated the 26th January, 1987, he was employed by AHK as Vice President Operations (VPO) from 1st February, 1987 for a fixed term of two years, at a monthly salary of 41,070.00 plus housing allowance for an apartment in Kadoorie Avenue. He avers that AHK purported to terminate the contract by its letter of the 16th November, 1987 on seven days' notice, which he accepted through his solicitors the same day as constituting an anticipatory breach of contract. He claims damages for breach of the fixed term contract, that is, salary for 15 months, housing allowance for the period 12th March, 1988 to 31st January, 1989 at the rate of 21,150.00; management fees for the apartment for the same period at the rate of $1,170.00 and utility services expenses such as telephone, gas, electricity and parking fees.

6. AHK deny that the agreement was for a fixed term employment or that the letter of termination amounted to seven days' notice or to anticipatory breach of contract on its part. It contends that the plaintiff was dismissed summarily for cause under the provisions of the Memorandum of General Terms and Conditions of Service (MGTC), which was eypressly agreed to apply to the plaintiff, it that:

(i) he acted in disobedience to instructions and orders and to the prejudice of his employers by appointing one Mr. Bambos Nicholas as First Officer on B707 aircraft when not qualified for the post, thus contravening Clause 13.3 and 13.4 of the MGTC;

(ii) he breached his implied duty of trust and confidence owed to AHK, alternatively an express condition of confidentiality set out in Clause 7.3 of the Office Procedure Manual, by:

(a) disclosing confidential information of AHK concerning its intention of operating three services a week to John P. Kennedy (JPK) Airport, Mew York, with two Boeings 747, in a letter dated 6th May, 1987 to one Mr. Houghton;

(b) without prior knowledge or consent of AHK, he allowed one Captain John Gingell (since deceased) to have free and unlimited access to the Company's Operations Room and to the light Operations Manual (FOM) and to make alterations to the Manual;

(c) he disclosed the salary structure of AHK to one Mr. Lavid Woodruff in a letter dated the 28th May, 1987; and

(d) he disclosed the defendant's policies in relation to staff recruitment and employment campaign together with the terms and conditions of employment including the salary structure to Captain Frank Seaton of Dragonair, a keen business competitor, in a letter dated the 5th June, 1987.

7. In its counterclaim, AHK claims a sum of $36,000.00 which was advanced to the plaintiff as a loan in three payments; also claimed is an aggregate amount of $9, 791,50 paid by AHK on his behalf a for electricity, gas, water charges and the replacement of an air conditioner.

8. All the reliefs claimed by AHK in items 1-6 were not pursued; thus leaving its claim for $36,000.00 (item 7), the claim for the utility charges etc. amounting to $9,791.50(item 8). interest (item 9), costs (item 10) and further or other reliefs (item 11).

9. In his reply and defence to the counterclaim, the plaintiff denied that the MGTC or the office procedure manual were incorporated into the contract. Concerning the appointment of Mr. Bambos Nicholas, it is averred that this was done with the knowledge and approval of the company president Mr. Thomas Tsang, and the director Mr. Tenly Lai. With regard to the disclosure of the alleged confidential information to the late Captain Gingell Dragonair and to Mr. Houghton, it is contended that all this was done with the express permission of Mr. Tenly Lai, while the  pay scale sent to. Mr. David Woodruff, whom the plaintiff hoped to recruit in the normal course of carrying out his duties as the defendant well knew. The plaintiff admitted owing the defendant the amount of $36,000.00, but denied liability for the utility charges etc. in the sum of $9,791.50.

10. The plaintiff began flying in 1965, and his first professional  job was that of a flying instructor. He joined airline service in 1970 and has been a training captain and a U.K. Civil Aviation Authority authorized examiner, safety and survival officer. He said that he entered senior management in 1980. The record of his career before joining AHK very briefly is as follows: for about two years from August 1980 to 1st September, 1982 he was with the Saudi Royal Flight as the Operations Manager. This airline operated two B707 and two BAC1-11 aircraft and he compiled the FOM for the latter type aircraft. From 1582 to November 1983, he was with the Manx Airlines as training captain, flight safety officer, survival and security officer. He assisted the chief executive of the airline to prepare all the manuals all the manuals and documentation for the issue of the air operators' certificate (AOC). From 1st December 1983 to 28th February, 1985 he served as the flight operations director with the Okada Air of Nigeria and was responsible for establishing the Operations Department and obtaining the AOC for the airline. He wrote the FOM for the BAC1-11 aircraft. From 1st June 1986 until 8th November, 1986 he was with the Olympic Airways as captain on a B707

11. The defendant company was incorporated in early November, 1986 as a cargo carrier. Its president, Mr. Thomas Tsang, who is a 80% shareholder of the A and F shares, has had previous experience in management consultancy and computer auditing during his time with Peat, Marwick and Mitchell when he worked within Cathay Pacific on its computer audit. He claimed to have had a lot of experience on the administrative management, computer and commercial aspects of the aviation industry. His computer company, Romanicus, still supplies Cathay Pacific with software for all its outport accounting systems. He said that before incorporating AHK, he had considered acquiring two other companies: the Oriental Pearl, which was an airline in the sixties and early seventies, and an off-spring called the Wayonett Enterprises which used the trade name Air Hong Kong. However, be did not succeed and instead incorporated AHK Air Hong Kong.

12. One of the executives in the defunct Air Hong Kong was Don Hufford, who later joind AHK as its senior vice-president.

13. During the time the plaintiff was with Okada Airways in Nigeria, he came to know the late Captain Gingell who helped him tremendously in his task, particularly in the training of the Nigerian pilots. He said that the deceased was with Aer Lingus for many years and described his skills as many and varied. The deceased later operated through his company called the Rapid Air services (Dublin) Enterprise.

14. According to the plaintiff it was the late Captain Gingell who recommended him to the then principal of the defunct Air Hong Kong, Danny Chan, and after a successful interview with Mr. Bufford and Mr. Chan, he was appointed as Acting Chief Pilot.

15. However, Mr, Tsang said that by the time they asked the plaintiff to join them, they had already incorporated AHK, and the intention was that he would join AHK.

16. On "8.11.86", the plaintiff informed Mr. Bufford by telex (p.1/D) that Olympic Airways had released him and that he would be ready to travel to Hong Kong on "11.09.86". There is no evidence of the actual date of his arrival here but it is common ground that he started working for AHK from 10th November, 1986 as Acting Chief Pilot and Chief Training Captain, without any formal contract.

17. It is also common ground that his main responsibility was to establish the flight operations department from scratch and as AFK intended to operate as a cargo airline using B707 aircraft, to formulate and compile the company' s FOM which comprised of several volumes, contatining essentially operating instructions, directions and general information relevant to the operations employees of AHK.

18. According to Captain Tait (PW 3), who is the deputy controller (Airworthiness and Operations) of the Civil Aviation Department (CAD), the FOM reflects the intention of the company management as regard the way in which the company will be conducted, operated  and managed.

19. The plaintiff said that by virtue of the Air Navigation (Overseas Territory) Order, the FOM is a pre- requisite for the issue of the Air Operators' Certificate (AOC).

20. Upon his arrival, the plaintiff found two partly completed volumes of the FOM by another company called Tempair. Mr. Tsang said that this company had previously been contracted to do the FOM. It is not disputed that the volumes done by Tempair were not satisfactory. The plaintiff maintained that his immediate superior officer, Mr. Hufford, had no operational experience with which Mr. Tsang disagreed and empbasised his past relevant experience with Boeing, However, the plaintiff advanced Mr. Hufford's lack of relevant experience in failing to realise the significance of - (a) the AOC, (b) the granting of the AOC ,and (c) the knowledge and experience required to obtain the AOC, as the reason why the Board of. Directors of AHK agreed to his promotion as Vice-President Operations at sometime in the future.

21. Mr. Tsang's version is different. He explained that the plaintiff's appointment as Acting Chief Pilot was of a temporary nature, pending acceptance by the CAD to take up the post of Chief Pilot. He said that the change of title from Chief Pilot to VPO in January, 1987 as mentioned in the letter of appointment, to which I shall come presently, was at the request of the plaintiff who proposed that with a better title it would be much easier for him to corduct his job.

22. It was pointed out by learned Counsel leading the defence, Mr. Eddis, that as early as December, 1986, the plaintiff was "self-styling" himself as VPO in his application for a Hong Kong Bank visa card (F6/D). Since there is nothing in Mr. Tsang's evidence as to exactly when the change in the plaintiff's title had been agreed to, for whatever reason, it looks highly probable that it was before he came to issue the letter of appointment.  If the plaintiff used the new title in his bank application, as he did, it is by no means improbable that it had already been so agreed. In any case, I do not think that Mr. Tsang made any comment on this aspect and I am of the opinion that if such had not been previously agreed, the president will not have mentioned this title when he came to write the letter of appointment.

23. The letter of appointment is dated the 26th January, 1987. It is at P.43/D. Mr. Tsang handed it to the plaintiff the same day. It is a pro-forma document, the empty spaces having been filled in by Mr. Tsang, as are some other words inserted and paragraph 3 deleted. I shall reproduce the letter, underlining the handwritten parts:

"We AHK Air Hong Kong Linited, hereby confirm with you that as from the 1st February, 1987, you shall be appointed as Vice-President Operations on the permanent staff list in accordance with an employment contract (which is to follow at a later date) of the company, on the following terms and conditions:-

1. Your appointment of Vice-President Operations shall be at a monthly salary of HK $41070. 00* to be payable in arrears on the first day of the month following, or on the last day of that serving month or whichever that is earlier,

2. During the Period of service you shall be entitled to four weeks annual leave after completion of twelve consecutive service;

3. 2 years contract

    month(s) petice of termination by either party shall be required should the company or you decided to terminate the service hereof as more particularly described in the company's 'MEMORANDUM' as hereunder referred below; and,

4. Your appointment of Vice-Persident Operations shall be entitled to the enjoyments of numerous fringe benefits of the company as defined in the said 'MEMORANDUM' as hereunder referred.

Your appointment as Vice-President Operations shall be subject wholly to the MEMORANDUM OF GENERAL TERMS AND CONDITIONS OF SERVICE FOR STAFP MEMBERS dated 1st February 1987 which shall form part of the company's rules and regulations. You are required to acknowledge receipt of your acceptance herein stated by signing and returning the copy of this letter as soon as possible, i.e. before 28th January 1987

*plus housing allowance covering the rental at KaDoorie Avenue.

24. It is not disputed that the plaintiff accepted such appointment on the 9th February, 1987

25. It was submitted on behalf of the defendant that discussions between the parties concerning the period of the notice to terminate continued even after the acceptance of appointment by the plaintiff. Mr.Eddis said that parol evidence was admissible to show that there was agreement that there should be a specific number of months' notice of termination, this on the testimony of Mr. Tsang. Reliance is placed on para. 818 of Chitty on Contracts, 25th edn., more particularly on the dictum of Tindal C.J., in Shore v. Wilson (1842) 9 C1. &  Fin. 335, therein cited. I need quote only a part of that dictum:

"The true interpretation, however of every imstrument being manifestly that which will make the instrument speak the intention of the party at the time it was made it has always been considered an exception or perhaps, so to speak more precisely, not so much an exception from, as a corollary to, the general rule above stated, that where any doubt arises upon the true sense and meaning of the words themselves, or any difficulty as to their application under the surrounding circumstances, the sense and meaning of the language may be investigated and ascertained by evidence de bors the instrument itself for both reasom and common sense agree that, by no other means can the language of the linstrument be made to speak the real mind of the party."

26. Mr. Merry (for the plaintiff however strongly opposed the reception of any such parol evidence from Mr. Tsang in that: (1) it went to contradict the express words of the agreement embodied in the letter of appointment which contained the whole contract, at least on a temporary basis, until matters were formalised; and (ii) the use of the handwriting and the deletion of para. 3, which dealt with termination by notice, strongly suggested an intent that there should be a fixed term with no early termination by notice.

27. It is recognised that much negotiation will accompany the offer of employment, but whatever the circumstances the law is interested in identifying the moment in time when a clear offer in precise terms was unconditionally accepted by the person to whom it was made. Thus the law looks to the moment when the negotiations are ended. This brings to mind Poley v. Classique Coaches Ltd. (1934) 2 K.P. 1 where Maugham, L.J. said:

"It is indisputable that unless all the material terms of the contract are agreed there is no binding obligation. An agreement to agree in the future is not a contract; nor is there a contract if a material term is neither settled nor implied by law and the document contains no machinery for ascertaining it."

28. Mr. Merry relies on Lam Mean-soon v. Luk Fuk Enterprises Ltd. (1980) H.K.L.R. 741, on the nature of pro forma documents, There, para. 716 of Chitty on Contracts, 24th edn, was cited during argument to emphasise the effect of the handwriten portions in such instruments. That paragraph remains unchanged in its context and is reproduced in the 25th edn. As para. 783. Macdougall. J. (as he then was )said at p.750:

"There is no doubt in my mind that it would be wrong to attempt to interpret the meaning of words, phrases, sentences or even clauses in either of these documents without a consideration of the wording of each document as a whole, and, in view of the fact that each is a pro forma document, without particular examination of those portions inserted by the parties in writing."

29. I respectfully agree and find that, because the third paragraph was struck out and the words "2 years contract" inserted instead by hand, the deletion of the original paragraph, which in fact related to termination by notice, and substituting for it those handwritten words, reflected the true intention of the parties at the material time. I do not see how it could be otherwise.

30. It is trite to say that generally the contract of employment will state the period of notice which must be given by either party. Where there is no specified period, in essence the law will imply a term of "reasonable notice ". It is however, possible to displace the implied term by the use of an express term in an employment contract, one such express term being the one which fixes the duration of the contract. It is obvious also that a contract for a fixed term must clearly be, in terms of this phrase, for a specifically stated period. Here, taking the term of two years which was specifically stated together with such factors as the relatively short duration of the engagement, the nature of the job and the deliberate deletion of pargraph 3 of the pro forma letter of appointment, I have no doubt that the implied term as to termination by reasonable notice had been ousted, so that the employer will have lost the right to dismiss on reasonable notice, but not its right to dismiss summarily even where the contract is silent on the point because the right to dismiss instantly for one of the accepted grounds, including inter alia, insubordination and misconduct, is preserved to the employer for the simple reason that obedience and fidelity are implied terms of all employment contracts.

31. Besides specifying the term of two years, the letter of appointment stipulated unequivocally such other vital terms, as the job title, the salary package, the date from which it was to commence and the annual leave. The mere fact that the parties had expressly stipulated that a formal employment contract was to follow does not by itself show that they continued merely in negotiation: Rossiter v. Miller, (1978) 3 App. Cas. 1124. Such an agreement, which Mr. Tsang himself regarded as an interim measure or a temporary agreement, seems to me to be complete in itself and in no way dependent on the making of a formal contract.

32. I am not persuaded that AHK has discharged the heavy burden which rests upon it to show as it alleged that a seemingly complete instrument such as this letter of appointment embodying the terms of the contract is incomplete.

33. For these.reasons, there being no doubt in my mind about the true sense and meaning of the words of the instrument or any difficulty as to their application, I do not find any proper or valid reason to pray in aid parol evidence to interpret it.

34. I find that the plaintiff's engagement with AHK was for a fixed term of two years and, applying Branca v. Coharro (1947) K. B. 54 I hold that the temporary agreement contained in the letter of appointment was binding until the formal agreement was drawn up and signed; the latter was not a condition which had to be fulfilled before the parties were bound.

35. It will have been seen that besides paragraph 4 of the letter of appointment where the MGTC is mentioned in relation to fringe benefits, the penultimate paragraph purported to make the plaintiff's appointment subject "wholly" to the MGTC. Reference was made to the MGTC in final submissions. Mr. Eddis submitting that despite reference to it in the letter of appointment and the non-finalisation of the MGTC until July 1987 the vital sub-clauses 13.3 and 13.4 cited in AHK's pleadings not being in issue since they were conceded either as arising from the MGTC or from the common law, argued that the plaintiff's evidence that he knew absolutely nothing whatsoever about the MGTC was one example of his scant regard for the truth. Mr. Merry would only say that because the MGTC was non-existent at the time of the letter of appointment, it was never incorporated into the contact either expressly or by implication.

36. This may now only be of academic interest since Mr. Merry conceded that the common law regarding summary dismissal applied. Nevertheless the point about the plaintiff's knowledge about the MGTC has to he considered. It must be said that, on Mr. Tsang's own evidence, there was in fact no such document as is mentioned in the letter of appointment in existence in January, 1987. He was emphatic though that a draft MGTC was "on hand before the issuance of the appointment letter to all existing staff or 26th January because it is actually referred to in the appointment letter." While he had intended it to be effective from 1st February 1987, it is common ground that it was not until the 8th July 1987, when the plaintiff was still in England awaiting his return to Hong Kong, that a final version was circulated. Mr. Tsang ascribed the delay to the plaintiff who had not submitted his comments on such portions of the draft as were passed on to him partly by the president and partly by the Vice-President, Adminstration, Mr. Chui Hay-man, until 8th June, 1987. There is in the bundle of agreed documents at p.4/D a document headed "Office Procedure Manual" dated the 1st December, 1986. The only other documents which were thereafter being worked on were the MGTC and the employment contract. In his memorandun of the 6th Januany, 1987(at p.8/D)to Mr. Chui, Mr Tsang asked him for the draft and the comments which had been made by the staff.. It is not disputed that on 8th June, 1987 the plaintiff sent his comments (p.141/D) to Mr. Tsang. It would thus seem probable that the plaintiff was not only aware, as he admitted, that terms and conditions were being worked on, he knew also, again as he admitted, that he was commenting on subjects such as the Memorandum of General Terms and Service". I find that his insistence that he knew nothing about it cannot possibly be true, just as I find Mr. Tsang's insistence, evidenced in his tautological comment that the draft MGTC was the final version in so far as the plaintiff was concerned, puerile. It is without doubt that both sides entered into the contract knowing full well that there was no such document in existence in January 1987 and the language used in the instrument of appointment being clear cannot be taken to mean that the plaintiff had undertaken to be bound by the terms of the MGTC as and when it was enforced in the future. In that regard the plaintiff lost no time in reserving his rights after he had first sight of it in November, 1987.

37. It is common ground that during those early days the plaintiff was engaged primarily on the compilation of the FOM using some manuals of other airlines which had been obtained as "cribs" or precedents, e.g.Anglo, Tradewinds and British Airways, all for Boeing 707 aircraft, the type which AHK wished to operate. Obviously these precedent manuals would have assisted the plaintiff greatly but this did not mean that it diminished his responsibility in that regard in any manner. His claim that he put in as much as 10-12 hours a day, seven days a week, on the compilation work was disputed by Mr. Tsang, and his claim to being the sole author of the FOM, which was finished in about June, 1987, did not escape a comment from Mr Eddis who described his version of single-handedly producing the FOM as exaggerated and self-glorifying. I recall Captain Robert's evidence that when he was working on the  FOM of Dragonair, using similar precedent manuals, he worked 15 hours a day, 7 days a week, for at least 10 weeks, not counting the time spent in production. The plaintiff's effort does not sound exaggerated by this comparison. While it is true to say that there were many other helping hands on the production side, I do not think, with great respect, that such nit-picking and uncharitable criticism is justified to discredit the man and deprive him of the credit, which in my view right-fully belongs to him,of  enablipg AHK through his efforts to producing the sort of FOM which was acceptable to the CAD, leading to the issue of the AOC on the 22nd January, 1988.

38. It is not disputed that in December, 1986 the plaintiff drafted and caused to be published in the FLLGHT Magazine an advertisement for various type rated B707 crews, including inter alia Chief TrainingCaptain with IRE/TRE (i.e. Instrument rated Examiner Training Examiner) and First Officer of 500 hours on type. The advertisement called for applications "in strictest confidence, enclosing a full C. V. with photograph" and concluded with this admonition: "Please note: Phone calls or personal visits will not be entertained under any circum stances." One of those who applied and was subsequently appointed as Chief Training Captain was David Warburton (D.W.3), presently AHK's Chief Pilot. Mr. Tsang said that some 50 qualified applicants responded. However, one Mr. Bambos Nicholas, whom the plaintiff had known for many years as an experienced First Officer, telephoned him on a personal basis and asked to be considered as a possible candidate, to which the plaintiff responded with an emphatic affirmative.

39. In the meantime, AHKwas involved through the late Captain Gingell as its agent in active negotiations, which started in January 1987, with Tradewinds Airways Ltd. of London, for leasing a P707 aircraft. It is not disputed that the lease was initially envisaged as a 'wet' lease, that is, Tradewings were to provide its own crew, for a minimum of six months with a possibility of 'drying' out the crew who were to be replaced by the AHK employed crew. Mr. Tsang accepted that the plaintiff had expressed his reservations about the length of the notice that was required for converting the wet lease into a semi-wet lease.

40. The plaintiff sought to justify his action of offering appointment to Mr. Hamlos Nicholas, who admittedly locked the qualifications for the past as specified in the advertisement, on the basis that it had been approved by the executive vice-president Mr. Tenly Lai (D.W.2), whom he regarded as his link with the Board of Directors. He maintatined that the appointment was subsequently confirmed by Mr. Tsang at a meeting on the 17th April 1987 at the coffee shop of the Intercontinental Hotel, Park Lane, London. during their stay for the completion of the Tradewinds lease which was signed or the 23rd of the same month.

41. In describing Mr. Lai as the 'link', the plaintiff was at great pains in describing the atmosphere in the start up period of a small company such as AHK in its early days. Not only was it extremely informal, he had unlimited and unhindered access to the three directors, including the president, where they were as he put it, living out of each others' pockets and where what happened to the right hand the left knew, and talking to one director was like talking to the three of them. He pointed out also that an airline is a living thing and there must always be someone to take final decisions. However, this version, the "trinity" theory as it was termed, was disputed by Mr. Tsang who said that there was a special job specification for each director. He maintained that only he was the final approving authority for any new appointments.

42. If the plaintiff's version concerning approval by Mr. Lai were to be correct I find it inconceivable that he should not have proceeded immediately to despatch a telex to Mr. Bambos Nicholas in terms similar to the one which he asked Mr. Cedric Charl (L.W.4), another executive vice-president, to transmit to him after the coffee shop meeting of the 17th April. The only possible reason why he did not do so is a clear indication that he knew, as Mr. Tsang said, that final approval lay not with Mr. Lai but with Mr, Tsang.

43. In support of his contention that the plaintiff knew of the practice concerning new appointments, Mr. Tsang cited the plaintiff's memorandum dated 8th June, 1987(p.141/D), submitting his suggestions, where he mentioned the "first step" in the employment of new staff as being the president's approval. Considering the proximity of this communicaton to the time of this event, the fact that the plaintiff had been working for the company for about half a year by then, and the hiatus in offering the appointment to Mr. Nicholas immediately after the alleged approval of Mr. Lai, I am in no doubt that the plaintiff well knew that he had to have Mr Tsang's approval before he could do so.

44. Relying as he was on the meeting of the 17th April as the president's approval, it is necessary to examine that meeting more closely. He said that he was sitting with Mr. Hambos Nicholas when the president joined them. They spoke about Mr. Nicholas and his forthcoming employment. Mr Tsang is alleged to have said that he was very happy to meet him and to have him aboard. Mr. Tsang 's version is quite different. He said that he was leaving the coffee shop after lunch with his wife when he noticed the plaintiff sitting, with some people, including children, near the entrance. He stopped by and was introduced to Mr. Nicholas. He said to him "Nice knowing you" and left.

45. Under cross-examination, the plaintiff claimed that in appointing Mr. Nicholas he had exercised his executive authority as no question had been raised since he spoke to Mr. Lai and Mr Tang, knowing that Mr. Nicholas was joining the company, did not stay at the table or ask any questions.

46. It seems to me that there was nothing in that meeting which could possibly have provided any basis for the exercise of the so - called executive authority, which he had not even thought of harnessing subsequent to the alleged approval of Mr. Lai. For example, he agreed that at the coffee shop meeting he only gave a cursory refresher explanation to Mr. Tsang which, he maintained rather surprisingly in my opinion, amounted to an interview of Mr. Nicholas, in the sense that Mr. Tsang could physically see Mr. Nicholas, the way he looked and spoke and his general attitude. While agreeing that Mr. Tsang would be right in regarding that meeting as in no way constituting an approval by him of that appointment the plaintiff said that he took it as confirmation of his judgment. I disagree. Not only did Mr. Nicholas not have the necessary qualification the plaintiff knew also that his appointment would land the company, in the words of Captain Tait of the CAD, in a very "messy, untidy training situation for an airline to support". That he was aware of this is amply borne out by his letter to Mr. Nicholas of 1st May offering him appointment on the conditions set out therein, particularly (a), which reads:

" (a) You must hold a Part 2 on the, B707 on your U.K. CAA licence by 1600 bours on 3rd June 1987, otherwise our offer will automatically terminate. This period may be extended but this will be at the sole discretion of the Vice President Operations."

47. In those circumstances and as Mr. Tsang knew of the very encouraging response from qualified people, I do not think that Mr.Tsang could possibly have given any indication of approval for the appointment of somenoe who was not qualified. Mr. Tsang sate as much, and I believe him.

48. The plaintiff argued that the company would have incurred no expense on account of the training of Mr. Nicholas on the simulator, in that he could have utilised the spare seat. I do not find it as a valid point as it side steps the fundamental issue which remained that the man was unqualified for the post from the very beginning. The plaintiff then changes his position, saying that his condition (a) was, on the one hand to light a fire under him to get going, on the other band, in view of the impending shortage, it was purely logistic. It is olvcious that neither provided any logical answer to the fundamental issue.

49. Considering the whole evidence, I am driven to the conclusion, which in my opinion is inescapable, that the plaintiff's entire approach to the Bambos Nicholas episode was wrong from the very beginning. He started on the wrong foot by going against his own warning in entertaining a direct personal approach. He was wrong in considering a man who lacked the necessary qualifications set by himself. He was wrong in assuming a non-existent executive authority and he was wrong in his so called logistic approach whicb was contradicted by the unqualified candidate. In the circumstances when the response to the advertisement was from other qualified people, the plaintiff obviously had no valid reason or excuse to offer the appointment to an unqualified person allowing him time to qualify and reserving to himself, without the knowledge of the president, the sole discretion to extend such training period further.

50. I find that the plaintiff knowingly flouted and disobeyed the company's policy of recruitment, which amounted to misconduct on his part.

51. Mr. Tsang was asked why he did not dismiss the plaintiff on the spot when he learnt of the appointment letter that was sent to Mr. Bambos Nicholas. This letter (p.129/D) came to light when Mr. Lai's secretary, who was responsible for the general filing of daily correspondence, came across it, presumably in August when Mr. Tsang was in London and was informed about it by Mr. Lai on the telephone. Mr. Tsang's reply was:

"As I said I was informed over the phone of the incident. At that stage I had not got the chance to look into the situation in greater detail. In any case, at that stage one act of misconduct would not be sufficient for dismissal." That was not only reasonable but a very correct preliminary assessment of the situation.

52. Mr. Tsang returned to Hong Kong in May and was surprised to find the late Captain Gingell in the Operation Room. He had acted as the company's ad-hoc representative in the ill-fated Tradewinds lease which had to be aborted subsequently in July due to the failure of the leassor to appoint HAECO as its subcontractor to their maintenance facilities support. According to the plaintiff, the late captain was on holidays and had offered his help free of charge on the FOM, which he accepted with the approval of Mr. Tenly Lai. Mr. Lai denied giving any such approval and said that the late captain was introduced to him and Mr. Cedric Chan as someone who had had some dealings with the company and had dropped in to see the people. Mr. Chan said that when he found the late captain in the Operations Room on another day reading the FOM, he asked the plaintiff why he had the entrance key. To him the plaintiff said that the president had agreed to the arrangement. Mr. Tsang denied any knowledge, and asked the plaintiff for an explanation. The plaintiff told him that the late captain was very experienced and was specifically requested by him to help out on volume 9 of the FOM on the subject of flying, adding that a pair of fresh eyes looking at the manual would do a lot of good. Mr. Tsang said that he was not convinced because he had been given to understand that the FOM was almost complete and acceptable to the CAD. So, he saw the late captain again to assess the progress on the FOM, and leant that he was about to leave in a couple of days without completing what he had started. He then asked the late captain to stay on and complete the volume on a proper paid consultancy basis, with a view to finding out the real reason for his coming to Hong Kong. Mr. Tsang said that he found out subsequently from the late captain that in 1986 he had turned down the position of Vice President Operations in AHK due to ill health. That position of assistant to the plaintiff had been given to Captain Ian Robertson in 1987 on a temporary basis, and the late captain said that he came to try to get the job back.

53. Captain Ian Robertson referred this matter in his affidavit which was taken into evidence by agreement. The plaintiff confirmed that he had tried to contact the late captain at the very beginning to set him as his right hand man but he was then in hospital.

54. Considering the evidence and in view of the fact that the plaintiff had some months previously considered getting the late captain as his right hand man in AHK, it seems quite probable that the late captain might have dropped in to seek the appointment which Captain Ian Robertson was then holding on temporary basis. I see no reason why the three directors should concoct such a story and I find that the president had not approved of the arrangement and, in telling Mr. Chan that he had, the plaintiff had in fact lied in order to explain the late captain's presence in the Operations Room. It is true that Mr. Tsang permitted him to stay on but that, in my opinion, is relevant to the issue of confidentiality to which I will come presently; it is not relevant to the presence of the late captain inside the company's premises initially. In so far as the latter is concerned, its significanice lies in the non-candid and obviously lying manner in which the plaintiff went about in getting the late captain involved in the exercise, in other words, getting him in without prior approval.

55. In June, towards the end of the month, Mr. Lai's secretary showed him another letter she came across during her filing duties. This is a letter dated the 5th June, 1987.sent by the plaintiff to Captain Frank Seaton of Dragonair. I need not set it out in full; it is to be found at p.137/D. It is admitted by the plaintiff that it sets out in great detail that pay structure and benefits offered by AHK for the whole range of staff from Chief Pilot down to the Loadmaster. The plaintiff said that this was on the basis of a mutual exchange with Dragonair and he sent off the letter with the prior approval of Mr. Tenly Lai at a time when the president also was in Homg Kong but was not consulted.

56. By the time this letter was discovered, Mr. Tsang was in London, and Mr. Lai reported the find to him on telephone. In August, Mr. Tsang summoned the plaintiff from his home in Derbyshire to a meeting at the Copthorne Hotel. The plaintiff recalled the meeting but his menory was limited only to the allegation, which was put to him in the form of a rumour, that he was an alcoholic. Mr. Tsang was emphatic however that in addition to the rumour, he confronted the plaintiff with three matters: the offer of appointment to Mr. Bambos Nicholas, the presence of the late Captain Gingell in the Operations Room and the disclosure of the company's pay structure to Dragonair. Not getting any acceptable explanation from him and fearing that there might be other similar unauthorised appointments and disclosures of company information, Mr.Tsang instructed his co-directors to mount an investigation into all out-going mail in the central filing system. As a direct consequence the plaintiff was denied the use of the company stationery; he was forbidden to speak to the other operational staff while he worked on the flow chart in another office, and the look on the Operations Room was changed. The plaintiff's memoranda of 25th September (p.161/D) and 28th September (p.163/D) reflect his bitter complaints to Mr. Tsang with regard to the last two items.

57. The plaintiff was confronted again over those three matters at two subsequent meetings in September and October, attended also by Mr. Lai and Mr. Chan. Again Mr. Tsang felt that no acceptable explanation was forthcoming. He instanced one reply concerning the C.V. of Mr. Nicholas, about which the plaintiff said that it was always in his head. With regard to the other two matters, Mr. Tsang said that the plaintiff insisted that it was all for the company's good. The plaintiff maintained that he was shouted at and questioned aggressively at those meetings.

58. The plaintiff said that there was noticeable change in the attitude of the Board of Directors towards him since the FOM was completed by him. He said that the change of the look on the Operations Room and the embago on speaking to other operational staff and the rude attitude of the directors at the October meeting were indications to him that the Board were trying to get rid of him.

59. The chronology of the events clearly indicated that the Board of Directors of AHK were very concerned at the actions of the plaintiff. Mr. Tsang admitted that the change in attitude was there but not because the usefulness of the plaintiff to the company had ended. I am of the opinion that whatever change there was has to be considered in the light of those events.

60. However, the investigations unearthed two other letters in November, 1987 when the Oprations Room was being moved from Silvercord to the Airport Apron Services Ruilding. The first is a letter dated the 6th May, 1987 addressed to Mr. Houghton (p.13/D); the other dated 28th May (p.132/D) addressed to Mr. David Woodruff. The plaintiff said that Mr. Houghton was an old school teacher of his who had written to him. He showed the letter to Mr. Lai, drawing his attention specifically to the fourth paragraph, and enquired if he could send it . Mr. Lai's reply was, "Yes, why not?"

61. It is the fourth paragraph to which AHK objects, and it reads:

"My company is 'BRAND NEW' and at the moment we operate one B707. We are in the process of setting up a weekly service from Hong Kong to London Stanstead and for the remainder of the time the aircraft operates within S.E. Asia and Australia. We also intend operating three services a week to John F. Kennedy with two B747s. I have not flown B747s since working for Iran Air out of Tehran back in 1978 so it should be somewhat interesting. The problem however with this job is that I fly a desk 60% of the time so between that and training our pilots I don't much get the chance for regular JOLLIES'."

The plaintiff maintained that at the material time the Board of Directors did intend and hope to operate those services of B747s to JFK, but to his belief they did not have a commercial director with the relevant distant overseas experience, so that the hope of operating B747 was just not in the realm of realism. He opined that if the information were confidential, the damage to AHK by its disclosure would be "absolutely minimal". adding that a subsequent ATLA hearing for approval of the service would make the plan common knowledge. Under cross-examination, he said that he would have heard of the plan as part of what was going on around him and with regard to this information, while he thought it was marginally sensitive which he would not disclose to someone like Captain Seaton he might mention it to Mr. Woodruff whom he met in England, he insisted that the intention of operating to JFK was clearly a "pie in the sky".

62. With regard to the letter to Mr. Woodruff, the plafatiff said that, having known him for many years and having great trust in him, he sent him the salary structure for various posts, hoping to interest him to come to work for AHK and, as he trusted his judgment, if he could speak to and attract other pilots to consider joining AHK. He said he did not consider the information was confidential. Under cross-examination he said that it was his intenton to get a stockpile of reliable personnel for future reference in readiness for the transition of the Tradewinds lease to dry lease crew.

63. Mr. Tsang described these two letters as the "last straw". He said that the one to Mr. Houghton spelt out the company's commercial plan, having already negotiated with American charterer resulting in a letter of intent of which be claimed the plaintiff had knowledge. He said that there was nothing to prevent them commercially wet leasing an aircraft operating under the American airlines AOC, which was confirmed by Captain Tait. Regarding the letter to Mr. Woodruff Mr. Tsang said that he was most concerned, not knowing how many more similar letters there might be.

64. Mr. Tsang said that because of all these matters, his company had no confidence in the plaintiff to the extent that Mr: Tsang felt that he was like a "time bomb" in AHK. He disagreed with the four reasons suggested by Mr. Merry for his dismissal: AHF's desire to save money; the resentment at the plaintiff's greater knoledge on the operations' side than the directors; the plaintiff's reluctance to put commercial considerations above operational ones and the plaintiff's views of his own about the future need for aircrew which were resented.

65. An employee's duty was described by Greer, L.J. in Wessez Daicios.Ltd. v. Smith (1935) 2 K.P. 80, in these words: "During the subsistence of the contract of service and durirg his master's time the servant has to look after, not his own interests, but those of his master". What this means is that an employee impliedly agrees to perform his services faithfully and will not do anything which may injure or undermine the trade or business of the employer. The relevance of this obligation was expressed by Lord Esher, M.F. in Pearce v. Foster (1886) 17 C.E.D.536 this way:" If a servant conducts himself in a way inconsistent with the faithful discharges of his duty in the service, it is misconduct which justifies immediate dismissal." Thus, for in Sinclair v. Netting, (1966) 3 ALL E.R.988 the action of the manager of a betting shop in borrowing money from the till in order to place his own bet, leaving a signed IOU and later replacing the money, although not regarded as dishonest was held sufficiently inconsistent with his duty as an employee to justify instant dismissal once the action was brought to the attention of the employer. The employee's conduct wes held to be "of such a grave and weighty character as to undermine the relationship of confidence which should exist between master and servant" -see also Denmark Productions Ltd. V. Boscotel Productiops Ltd. (1969) 1 O.R. 699

66. Good faith on the part of the employee, which is a basic condition of employment, has been   described by Brian Brooks in his book Contact of Employment, 3rd edn., at p.73 as "a portmanteau duty, a catch-all which covers many aspects of day to day employment."

67. As I have indicated earlier, the plaintiff's conduct with regard to the offer of appointment to his friend Mr. Pambos Nicholas was such that he had knowingly assumed the authority of his president and, in so doing, not only did he disregard but disobey his employer's recruitment policy on the basis of some imagined and obviously misguided executive authority in matters operational.

68. Another instance where he conducted himself in similar fashion is to be seen in his exchange of the company's salary structure with Captain Seaton of Dragonair. While it is true that as is apparent from the various job opportunity advertisements in the FLIGHT Magazine, some indication of the pay and benefits is mentioned it is significant that, in the one which the plaintiff drafted, the salary was not mentioned. However, mention of the salary in such advertisements is simply an indication to the prospective applicant of what to expect. What is not set out is the entire pay structure. While Captain Roberts agreed with the plaintiff that such exchange of salary structure is usual in the industry, where he parts company with the plaintiff is not the authority of the officers who do the exchange. Captain Roberts was at the material time responsible for the total company administration of Dragonair and he instructed Captain Seaton to carry out the exchange. The plaintiff's position in AHK was not of the same status. In his capacity, Captain Roberts did not have to show what his junior officer had received from AHK to anyone else in Dragonair. He said that on similar basis, if the plaintiff was not, as he in fact was not, the top man, he would expect his conditions of service to be handed up to a higher authority in AHK. It is manifest that the custom applying to such exchange, albeit common in the industry, is that it is done at the top level, that is, officers who have the final authority in recruitment matters. The plaintiff was not such top officer of AHK and could proceed with the exchange only with the prior approval of the president who was the appointing authority. I have rejected the plaintiff's claim to have had such anthority from Mr. Lai. The very fact that he thought that he had to have such approval is indicative of his appreciation that he lacked the authority to go it alone. Furthermore, having received the document from Dragonair in return, he kept it from Mr. Tsang until the matter blew up and the president demanded to see it. It is quite clear that his handling of the exchange with Dragonair amounted to another instance of knowingly usurping the authority of the president.

69. The same would ,in my opinion, apply to the disclosure of the salary structure to Mr. Woodruff. This gentleman was not related to AHK in any manner; he was not, for example, its appointed recruitment agent. Like Mr. Nicholas, he was a friend of the plaintiff. Mr. Merry argued that the plaintiff had implied authority to interest aircrew to join AHK. The phase in which AHK then was, negotiating for a wet lease which admittedly fell through later did not necessitate, as Mr. Tsang said and which I accept as reasonable, recruitment of air crew until a replacement aircraft was found. Moreover, whether it was for the good of the company or a logistic strategy for compiling a stock-pile seems to me to be irrelevant so long as the plaintiff backed the authority. In the circumstances, his communication to Mr. Woodruff was just as unauthorised as was that to Dragonair.

70. For these reasons, I find that those matters amount to conduct which was clearly inconsistent with the faithful discharge of his duty in AHK's service.

71. With regard to the issue of disclosure by the plaintiff of alleged confidential information, I was referred to the authority of Thomas Marshall (Exports) Ltd. v. Guinle and others (1978) I.C.R. 905 where Megarry V.-C. suggested per curliam four elements in identifying confidential information or trade secrets which the court will protect: first, the owner must believe that the release of the information would be injurious to him or of advantage to his rivals; second, the owner must believe that the information is confidential or secret; third, his belief under the two previous heads must be reasonable; fourth, the information must be judged in the light of the usage and practices of the particular industry or trade concerned.

72. The first instance in this regard was that of the late Captain Gingell being allowed into the Operations Room, with access to the FOM which the defendant claimed to be confidential. There is evidence that such manuals are available from other airlines. The evidence makes it quite clear that it is common practice for an airline in the start-up situation to obtain manuals from others already established and to tailor them to its needs. AHK did this, so did Captain Roberts of Dragonair. The latter was unable to say whether the use of the word "confidential" to the FOM was necessarily correct. He was of the opinion that the prime requirement of a FOM is that it shall relate to the operator. Agreeing with Mr. Eddis, Captain Roberts could not think of a better word than "private" to describe the FOM, emphasising that it was "very private" to the company concerned, based on the issue of liability of the airline. In view of this evidence I believe that the distinction which Captain Roberts obviously had in mind must be maintained so that it is unreasonable for AHK to clain that the FOM is confidential to the company.

73. The other instance is the disclosure of AHK's pay structure and conditions to Dragonair are Mr. Woodruff. Earlier on I referred to the distinction between a job advertisement on the one hand, and the entire pay structure of all designations on the other. If, as Captain Roberts said and I see no reason to doubt his evidence, such documents could be exchanged only by the top people who are the final authority in recruitment matters, it would indicate clearly the extent to which the airlines are concerned about the unauthorized disclosure of such information. It must follow that in the case of a new entrant in the field, as AHK was, the extent to which such information would be guarded would be considerably higher as compared with another which was well established. Unauthorized disclosure of such information could possibly thwart a budding airline's efforts to get the proper personnel, and thus lose out in the competition which would be unfair to it. I consider that AHK was justified in treating such information as confidential.

74. The third instance is the letter to Mr. Houghton. The plaintiff accepted that the information divulged by him was of marginal sensitivity. Besides describing the plan as pie in the sky, he seemed to draw a distinction between the operational side and the commercial side of the airline. I do not think that such a distinction is of any avail. Mr. Merry complained that the letter of intent mentioned by Mr. Tsang was not disclosed during discovery. Mr. Eddis said that in view of the sensitivity of the information they could not disclose it without an order from the court and no such application was made.   However, I think that Mr. Merry is on firmer wicket when he pointed out that the private meeting at which Mr. Tsang claimed to have revealed the plan to the plaintiff was rot put to him during cross-examination. What was suggested to him, and with which the plaintiff agreed, was that he would have heard of the plan as part of what was going on around him. Looking at the evidence carefully and taking into account that Mr. Tsang's assertion ahout the private meeting at which he allegedly revealed the plan to the plaintiff was not put to him, I am inclined to the view that on a balance of probabilites the plaintiff did not learn of it at any private meeting. I find that there is no cogent evidence to prove on balance that AHK had such a commercial plan, so that the issue of confidentiality is not erected.

75. The upshot of this discussion may now be summarised in the form of my findings as follows:

(1) The plaintiff's conduct in offering appointment to Mr. Bambos Nicholas and his conduct in the unauthorised exchange of the salary structure and conditions of service with Dragonair and likewise in submitting it to Mr. Woodruff was tantamount to knowingly assuming and usurping the authority of the president which was inconsistent with the faithful discharge of his duty;

(2) the plaintiff's conduct in letting in the late Captain Gingell into the Operations Room on the false pretext of having the blessings of Mr. Tsang was just as inconsistent with the faithfully discharge of his duty;

(3) the plaintiff's unauthorised communication with Dragonair and Mr. Woodruff constituted disclosure of confidential information which AHK is entitled to protect.

76. Taken together these findings constitute misconduct of "such grave and weighty character as to undermine the relationship of confidence which should exist between master and servant" - Sinclair v. Neighbour, supra. I accept Mr. Tsang's opinion that he saw the plaintiff as a time bomb within AHK, and I have no hesitation in concluding that he was justified in dismissing the plaintiff before his fixed term ran out.

77. This will now take me to the letter of dismissal dated the 16th November, 1987( at p.185/D), It is headed "without prejudice" but the parties waived any privilege to it. It reads:

"We refer to the recent meetings you had with the members of the company sometime at the end of last month.

The Board of Directors are in the opinion that you have, by virtue of your unauthorised action(s) while holding the post of Vice-president of Operation, violated the rules and regulations set forth in the company's Memorandum resulting to a serious breach of duties, save the mentioning of embarassment, inconvenience and damage of company's reputation caused thereto, thereby leading to instant dismissal.

In the circumstances, the Board is prepared to take a lenient view in your case, being an expatriate staff and to give you the option to either resign voluntarily or be dismissed. If so accepted by you, in either cases (sic.), you will be given a lump sum of money (being an amount equivalent to 3 months of your salary )for assisting you to return to U. K., Which said sum will be subject to: the deduction of a loan already advanced to you, deduction of one month's salary as retention fund for tax, and a deduction of various disbursements and/or outgoing charges incurred by the company for and on your behalf and other deductions as may be due and payable by you.

It has further been decided that, regardless of whether you are to resign or be dismissed, we have no alternative but to give you notice, which we hereby do, that your service is formally terminated 7 days from date hereof and to deliver up the possession of the premises, namely, Apartment "C" on the First Floor, Hillview Apartment, 48A, Kadoorie Avenue, Kowloon, Hong Kong, in its original state and tenantable condition provided always that there will be no damage made by you, within TEN DAYS from the date hereof and to surrender to us the key or keys in your possession in respect of or relating to the said premises as aforesaid, failing which we shall have no alternative but to pass the matter to the hands of the company's solicitors for the recovery thereof without further notice.

In the light of the foregoing, the Board decides to give you a period of 7 DAYS in which to signify your confirmation of the above terms and conditions, whether in the affirmative or negative, and to entering into an agreement full and final settlement thereto in the event that your decision is in the affirmative."

78. On the same day the plaintiff, through his solicitors, informed AHK that its conduct in terminating his contract form 23rd November 1987 amounted to anticipatory breach of contract which the plaintiff accepted.

79. Mr. Merry submitted that the letter constituted dismissal on seven day's notice, with the offer of three months' salary, (less deductions) as compensation or as recognition that the dismissal was wrongful. He said that the heading "without prejudice" indicated that the letter contained the offer of compensation. He was of the view that the letter did not appear to be an exercise of the power of summary dismissal, but he recongized that in Jupiter General Insurance Co. Itd. v. Shroff (1937) 3 All E. R. 67, the Privy council had treated dismissal on short notice as summary dismissal.

80. Mr. Eddis said that the letter always was a letter of termination; the seven days were intended to give the plaintiff a chance to answer on the option that was given to him. He argued that the three months' salary mentioned there remained unaffected, as the answer sought from the plaintiff was on the option which was without prejudice to AHK's right to summary dismissal.

81. It seems to me that factually the exercise of the option given by AHK was to bring about the same result which the company had in mind, namely, to dismiss the plaintiff.  The only thing that can be said about the option perhaps is that it offered him a respectable way to quit and had he taken that course and resigned, it would have made no difference as I have said; it would have, in the circumstances, amounted to a dismissal by the company nonethless.

82. I do not see any confusion about the terms of this letter. The intention obviously was "instant dismissal". The period of seven days stated as the formal notice of termination was also the period in which he was expected to reply on his election. In other words, as Mr. Tsang said, the period of seven days was to prompt a reply form him about his election. I am therefore inclined to accept the interpretation suggested by Mr. Eddis to this limited extent that the option which was offered to the plaintiff did not affect the offer of the lump sum payment of three months' salary which Mr. Tsang said was in lieu of notice. My construction is that this letter remained the same as it started, that is, a letter of instant dismissal, the offer of three months salary meant that he would receive money in lieu of working out his notice.

83. In the circumstances, such summary dismissal was with cause and the plaintiff's action for damages for breach of contract will be dismissed.

84. On the counterclaim, the defendant company is entitled to recover the amount of the loan, $36.000.00. which is admitted. With regard to the claim for utility charges etc., $9,791.50, these cover the period June 6th November, 1987. The plaintiff accepted that the word "rental" did not include utility charges, but maintained that those charges would also have been paid by the company, with the exception of telephone calls not related to the official business. It seems that the various amounts claimed were paid by AHK, though there is no direct evidence of the circumstances in which these payments were made. There is no explanation about the replacement of the air-conditioner. If those payments were made by the defendant company there is no evidence that it sought reimbursement from the plaintiff at the time, rather it seems that the payments were being made as a matter of course as and when the bills were received. Yet there is no evidence form AHK as to how it came to effect those payments. In the circumstances. I do not think that the claim for $9,791.50 has been proved, and it is disallowed.

85. The only other item is the general and vague "further or other reliefs'. Mr Eddis said that in the event the court found that AHK was entitled to dismiss the plaintiff summarily, then the plaintiff was not entitled to stay in the apartment beyond November 1987, and AHK would be entitled to recover any expenses incurred by the company in relation to those premises after December, 1987. Mr. Merry said that such a claim, being in the nature of mesne profits, should have been pleaded as part of the damages claimed and he submitted that it was too late to raise it under such a vague and general relief. Mr. Merry is absolutely correct and this claim ought to have formed part of the damages claimed by AHK. This claim raised at the eleventh hour under item 11 is disallowed.

86. The plaintiff's claim is dismissed and the defendant succeeds on its counterclaim for $36.000.00 only. There will be judgment for AHK accordingly. I will now hear the parties on the issue of costs.

    (After hearing parties) AHK to have costs of the action which is dismissed, and no order for costs is made on the counterclaim.